STOCKHOLM, October 10. /TASS/. The 2022 Nobel Prize in economic sciences was awarded to a former US Federal Reserve chair, Ben Bernanke, as well as two US researchers Douglas Diamond and Philip Dybvig, the Nobel Committee of the Royal Swedish Academy of Sciences announced on Monday.
The three US-based economists won the prize "for research on banks and financial crises."
This year’s laureates "have significantly improved our understanding of the role of banks in the economy, particularly during financial crises. An important finding in their research is why avoiding bank collapses is vital."
"Modern banking research clarifies why we have banks, how to make them less vulnerable in crises and how bank collapses exacerbate financial crises. The foundations of this research were laid by Ben Bernanke, Douglas Diamond and Philip Dybvig in the early 1980s. Their analyses have been of great practical importance in regulating financial markets and dealing with financial crises," the statement reads.
"For the economy to function, savings must be channelled to investments. However, there is a conflict here: savers want instant access to their money in case of unexpected outlays, while businesses and homeowners need to know they will not be forced to repay their loans prematurely. In their theory, Diamond and Dybvig show how banks offer an optimal solution to this problem. By acting as intermediaries that accept deposits from many savers, banks can allow depositors to access their money when they wish, while also offering long-term loans to borrowers," the statement says.
"The laureates’ insights have improved our ability to avoid both serious crises and expensive bailouts," Chair of the Committee for the Prize in Economic Sciences Tore Ellingsen says.